Daily US Stock Market Fundamental & Technical Analysis

Daily fundamental and technical analysis of the US stock market by full time hedge fund manager and options guru, Master Jason Ng (owner and author of Optiontradingpedia.com). Serving investors daily since March 2006.

Stock Market Analysis

Wednesday, February 11, 2015

Is The Market Ready For a Breakout?

Is the market ready for the breakout?

This is probably one of the biggest questions traders are asking as the market enters the third month of its sideways volatile behavior. One thing is for sure about such volatile channel behavior; that it breaks out strongly one direction or the other eventually and that trending behavior lasts much longer than sideways ones. This is what makes Neutral Options Strategies so tricky to implement in options trading.

Even though I hold the outlook that we should see a significant correction this year, the way the market has behaved over the past two trading days suggest that this may not be the start of that correction. In fact, more than any time over the past 3 months, the market looks cocked for an upside breakout. Like I always said, as a trader, there is no place for soothsaying... predictions and outlooks are merely entertainment, it is the actual price action that we believe in and trade in.

The price action, particularly the generally market leading Nasdaq100, over the past two days has strongly suggested an upside breakout due mainly to how the market has held up against continuing downwards following the evening star candlestick formation on 9 Feb 2015. That formation was the perfect formation for the market to continue downwards, continuing the sideways volatile channel and very probably leading into a downside breakout. However, the market resisted that formation and turned upwards instead on good volume. It has also remained up there yesterday and even continued upwards with the Nasdaq100. This is a significant change of character that strongly suggests that we should start preparing for upside opportunities and that is exactly what I am going to do for my Master's Stock Options Picks subscribers. Yes, the wait could be over at last!

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